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Having read your post on cap-and-dividend for a second time, i still do not understand your problem with it, nor the "trick" to which you refer. Unless you mean that the dividend is a little like a lump-sum dividend. If anything, this solution seems superior to the best possible version of Waxman-Markley, one with auctions permits. Now instead of the government keeping the revenue, it gets rebated to each and every person equally. Seems like a sensible compromise for a libertarian.

Particular issues I have with your post are:
1) "The "carbon dividends" of course are intended to make the tax politically palatable."
There is no tax here, remember. There is a cap on carbon emission. A quantity control. But of course there are price effects. And pretty much any govt. policy on carbon emissions is going to have to have some sweeteners, if for no other reason than equity considerations.

2) "Naturally I am worried by the idea of revenue addiction, not to mention the general practice of redistributing income from business to citizens simply because it is popular to do so."
You are waaay off here. Revenue addiction? Really? And redistributing from business to citizens? You sound like a climate skeptic here. Are we starting from the premise that carbon emissions are an externality? If not, then your post makes a lot more sense. Otherwise, how is any policy not going to involve some redistribution? I hope everyone realizes that with emissions being an externality, the status quo is not efficient, and some schemes of redistribution could be a Pareto-improving.

How about you share your thoughts on the Alaska Permanent Fund?
After all, that is an example of collective revenue sharing of a common resource. Peter Barnes' point is exactly the same. But the wonderful part is that it prices carbon, and hence sends signals to emitters through the correct channel, the price system.

"It can either ... further inflate government, or it can go back to the people." Not quite. It could be used as a major source of gov't revenue and offset a worse tax like the payroll tax. Taxing a bad (CO2) instead of a good (labor) would be more economically efficient. There is also the option of paying off debt, which libertarians committed to fiscal responsibility should talk about more.

I saw Kevin McCabe of GMU present a paper last April showing that the amygdala was a
center of monetary fears. Guess this Caltech gang beat him to the punch with a PNAS
paper on it.

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